Most carmakers including Maruti Suzuki have increased prices multiple times this year
With Covid-19 restrictions removed in most parts of the country, economic activity is picking up pace once again. Car sales are on the rebound, registering strong growth in recent months. Things are expected to get even better with the start of festive season. Ahead of that India’s largest carmaker Maruti Suzuki has announced plans to increase prices across range in September.
Prices will be increased of all Maruti cars which are on sale at Arena outlets (Alto, WagonR, Swift, Dzire, Celerio, Ertiga, S-Presso, Brezza, EECO and all TOUR models). Prices of Maruti cars on sale at NEXA outlets (Baleno, Ciaz, XL6, Ignis and S-Cross) will also be increased. New price list for Sep 2021 of all Maruti cars will be revealed soon.
Rising input costs
In its regulatory filing submitted to NSE and BSE, Maruti talks about rising input costs over the past year. To sustain normal business operations, the company is left with no option other than to increase prices. While Maruti will try to absorb rising input costs as much as possible, some of it will have to be passed on to customers. As per plans, the price hike will be announced in September 2021.
One of the key reasons for rise in input costs is the disruption caused by the pandemic. The ecosystem comprising component manufacturers and global supply chain has been adversely impacted by Covid-19. There’s a global shortage of semiconductors, which is forcing auto companies to pay more to keep production lines running.
Another reason for price hike is stricter emission norms such as BS6 and Euro 5. Several countries across the globe have recently shifted to new emission norms. To comply with these new standards, automobiles are being fitted with catalytic converters. These are quite pricey, as they make use of precious metals such as platinum, palladium and rhodium. As global demand grows, price of these precious metals is consistently rising.
Not every customer is impacted by price hikes, as is evident in rising sales of cars in recent months. However, the ones with limited budget certainly feel the pinch. The alternatives could range from buying a second hand car or going for a more affordable option.
Rising fuel prices has been another pain point for consumers in recent months. Many users can be seen converting their cars to CNG. Demand for new CNG cars is also on the rise. In view of these developments, Maruti will be launching CNG versions of Brezza, Dzire and Swift. Maruti’s current range of factory-fitted CNG cars include S-presso, Celerio, WagonR, Alto, Eeco and Ertiga.
Maruti’s third price hike
Regarding this latest price hike, Maruti had informed stock exchanges earlier this year in June as well. At that time, the company had said that the prices will be revised sometime in Q2 FY22 (Q3 2021). However, throughout July and August, the company chose not to increase prices. It’s now clear that Maruti’s third price hike this year will be announced in September.
Maruti’s first price hike this year was in January. At that time, prices were increased in the range of Rs 5,061 to Rs 34,000. Second price hike was in April when prices of select variants were increase by an average of 1.6%.